> Whether you spend $50 to mine at 3 gigahash/sec, or $50,000 to mine at 3,000 gigahash/sec
You forget to take into account that cost per GH plotted against volume is non-linear. At $50,000 investment one won't see much difference and the graph will look linear. At $500,000, though, one can design and manufacturer their own ASIC and purchase everything in high volume. Then the cost plummets like a rock. And I would argue $500k is where large scale mining starts these days, not $50k.
Yes, but there is so much competition between ASIC manufacturers that eventually (in the next 6-12 months), the profit margin of mining hardware vendors will drop to typical high-volume electronics industry levels: 5-10% or so.
When this happens, all a large scale miner can hope to accomplish by manufacturing his own ASICs is to save that 5-10% which is going to be insignificant compared to the free power/cooling from small scale miners.
Good point. But the margin between cost of goods and MSRP is much larger than 5-10% for consumer electronics. Distributors and retail stores take a large chunk. Nobody in particular makes a large profit, but all those chunks from factory to store shelf add up to a huge percentage, 50% and up. Those are the costs small scale miners will have to overcome.
I am interested to see how the dynamics play out, but find it hard to believe that they will be much different than anything else.
Take home gardening, for example. It's easy to say that it's cheaper, and pretend the food is free, but it isn't. The biggest cost there is time. People are willing to discount the time spent gardening, because they get pleasure out of it. But it's a real cost, and that time could have been more profitably spent doing contract work (for example).
If you sum up everything one gains from having a home garden, will the consumer see a net gain? Probably not. But people do it anyway, because they don't see it as work. They'd rather do that, than fill their time with another job. That's where mining will end up in the long run, in my opinion. And I have my doubts that that sector will be large enough to prevent centralization.
P.S. I appreciate the discussion. Speaking honestly, I'm still close to the fence on this one. I hope my remarks don't come off as rude; I enjoy seeing the arguments made for one side or the other.
You forget to take into account that cost per GH plotted against volume is non-linear. At $50,000 investment one won't see much difference and the graph will look linear. At $500,000, though, one can design and manufacturer their own ASIC and purchase everything in high volume. Then the cost plummets like a rock. And I would argue $500k is where large scale mining starts these days, not $50k.